Eastern European Property


Things have slowed down a great deal in Montenegro since the global financial slowdown began. There has been a severe reduction in the number of buyers in the market, and the country’s economy is shrinking. But it “couldn’t have come at a better time” according to Montenegro architect Robin Gellately Smith of Kotor based Total Group.

Robin explained How Montenegro’s slow planning approvals process, which was a source of developer’s anger a few months ago is now viewed by many as their saviour because:


Flipping off-plan property was a mainstay strategy of property speculators over the past few years. With fast rising house prices, the idea was to put a deposit down on a home before building starts and then sell it when construction is completed.

Meanwhile, all the capital at risk is the deposit and the profit comes rolling in at the end as the property value appreciated during the construction time. Now, builders are mothballing their projects or selling them off at a supposed discount to stave off the creditors as off plan speculation has dried up.

Off plan was always a high-risk strategy- and now it’s hit a wall with the recession, according to the International Herald Tribune.


While property sales in Warsaw appear to be still on an increase, the overall Polish property market seems to be taking a nose dive. Some real estate agencies like, Ober-Haus blame the difficulties of obtaining home finance as the culprit for this turn of events.

Many property developers of recently completed projects, seem to be offering promotions and ‘discounts’ to home-buyers. But the talk of price reductions seems to be making many buyers cautious and waiting, rather than buying.

On the 1st of July, 2008, London-based overseas property specialists, Fresh Property Co opened Fresh Property Albania offices.  The offices are located in Albania’s capital Tirana and in the coastal resort of Saranda, opposite the Greek Island of Corfu.

Since launching Albanian property for sale since 2007, the demand from international investors has been very high, due to the very low property prices and excellent capital growth and rental return projections.

The offices will provide on-going support to clients of Fresh Property Co, as well as regular sales, long term lettings and holiday lettings for locals and tourists.

The offices are located in prime locations in Tirana’s city centre, just off Myslim Shuri, and in Saranda, next to the bustling port.

Fiona Bosticky, the company’s director said: “We are very excited to be opening these new offices at a time when the Albanian property market is taking off, and other more established markets are cooling.  Having our own offices and own staff on the ground will help us to maintain a very high level of service for our clients”.

Fresh Property Co offers a portfolio of investment property in the capital Tirana, and also in the beachside resort towns of Durres, Vlora and Saranda.

There has been a great deal in the press recently regarding the fast emerging Russian market with details on Russian buyers investing in property around the world in ever increasing numbers.

Six years ago the aiGroup created the full mechanism to enable International Real estate agents and developers to target and contact potential Russian investors. The Moscow International Property Shows were the first events to be staged in Russia and the success is due to careful management and appreciating the requirements of the participants.

The Moscow International Property Shows have now been joined by the Moscow International Investment Shows and the St. Petersburg International Property Shows with all events following the same principles attracting high numbers of potential buyers.

After our in depth look at dubious building developments in Eastern Europe, Forbes magazine has jumped on the band wagon and gone a little up market. In that vein, we decided to present some of the most expensive properties in Eastern Europe. Some are currently for sale, some are just in need of an idea to turn them into money makers and some are just plain expensive.

Sotheby’s International are offering this gem on the “Cote D’Azur of Baltics,” Latvia. Price undisclosed.

Romania News Watch have published a briefing article by the Oxford Business Group suggesting that speculation in the country’s property market, especially from abroad, may be reaching dangerous levels. In particular, the interest of foreign property investment funds may not be a sign of commitment to Romanian real estate and that the first signs of weakening in prices could send them running for cover.

Since the beginning of the decade there has been an enormous rise in the prices of apartments. In central Bucharest, the country’s most important real estate market, prices have risen from 7,000 euros seven years ago to 100,000 to 150,000 euros this year. According to Global Property Guide, Bucharest apartment prices average 2,350 euros a square metre and the rental yield is a respectable 7.83%, which places it in a similar bracket to Tallinn, Prague and Brussels.

Rige Latvia
View of Riga, Latvia from St Peter’s Church [Photo credits to Azmuskoka on Flickr]

Latio, Latvia’s biggest real estate company reports that Riga property prices have now fallen in two successive months; the outlook for prices in the short-term does not look good. The latest of Latio’s excellent series of monthly reports on the Greater Riga property market shows a decline of 3.5% in the price of ‘standard’ apartments in the region, which follows on from a 1% decline in May. This is an abrupt turnaround from earlier in the year, which saw Riga posting a 44.23% rise in prices in the 12 months to Q1.

Lativa has entered a tricky phase in terms of credit ratings (down in February), current account, cost of living (rising more sharply since the Spring), exchange rates and interest rates. The value of Latvia’s currency, the lats, is pegged to the euro but the Bank of Latvia has had to increase its interbank rate steeply this year and fluctuations in interest rates have been severe; the (6 month offered rate) level is currently 7.36%.

Victoria Park Apartments Moscow
Victoria Park Apartments Moscow[Photo credits to Miraluz06 on Flickr]

Moscow News has published an interesting snapshot of Moscow’s residential property market, both the for sale and for rent. The key observation seems to be that letting agencies are assuming an increasingly important role in the rental market and that the higher end of the market is becoming proportionately more important. The vital ingredient that agencies bring to the process is ensuring that all the properties on their books are available with legally binding rental agreements. Going down this route has the obvious advantages of protecting the unwary foreigner from abrupt evictions or rent rises.

There’s no disputing that Moscow is an expensive place to live. The Mercer cost of living survey in this spring placed the city in top place with a cost of living that was over a third higher than New York City’s. Naturally, costs of accommodation are an important feature of this and at the beginning of the year Moscow was sixth most expensive European capital in terms of purchase costs and fifth highest in terms of rental and rental yield. Renaissance Capital estimate that Moscow’s residential property prices have averaged a 90% rise in the 12 months to 2nd Quarter 2007 and forecasts that the rises will continue, all-be-it at the more sedate level of 16 to 11% a year through 2007 and the succeeding three years (read report here (pdf)).

However, the latest statistics taken from Global Property Guide: suggest that by May this year rental yields were on the way down, from above 8% to between 4.5 and 6%. Rentals have been failing to keep up with purchase prices, particularly at the higher end of the market. One reason for this is the competitiveness of mortgage rates. Low interest rates should fuel the rise in residential prices.*